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PATHE STRONG IN ’96

Demerged company mulls BSkyB stake sale

PARIS — Pathe, the French communications company that was demerged from the giant Chargeurs group last summer, has reported that 1996 consolidated revenues leapt 68% to 1.8 billion francs ($315 million). Net in-come for the year hit $32 million, following an $89 million loss in 1995.

Last year was Pathe’s first since the transfer of all Chargeurs’ media activities, following the splitting of Chargeurs’ textiles and communications businesses.

Tuesday’s results came against a background of continued speculation that Pathe may be considering selling its 17% stake in Rupert Murdoch’s British satellite broadcasting company BSkyB. Estimates put the value of Pathe’s stake in BSkyB at around $3 billion.

Pathe execs Tuesday put the bulk of the revenue growth down to the consolidation of Renn Prods. and distribbery AMLF in the Pathe accounts, as well as the inclusion of results from the former MGM cinemas in the Netherlands — which Pathe acquired in 1995.

By far Pathe’s most lucrative investment is BSkyB, which last year contributed $66 million to the company’s $90 million earnings before interest, depreciation and amortization (EBITDA).

BSkyB represents Pathe’s largest single asset. Acquired by Chargeurs, the 17% share was a canny investment by group chairman (and Pathe boss) Jerome Seydoux. But analysts now say that while Chargeurs’ stake soared in value as BSkyB’s share price rose in the early ’90s, similar gains are unlikely to be repeated. Seydoux, it is argued, may now feel it’s time to cash in his chips.

The Pathe boss may need funding in the near future. Pathe is the principal backer of the Pathe Pictures consortium, which is applying for one of the four National Lottery-subsidized film franchises in Britain. That bid involves eq-uity finance from Studio Canal Plus, investment banker BZW and debt finance from Coutts.

If Pathe does part company with BSkyB, Seydoux and his team will still be involved in television broadcasting. Pathe has a 20% slice of Canal Plus’ satellite operation Canal Satellite, which launched its digital platform in France last April. Startup costs of the digital service weighed on Pathe’s results, contributing a loss of $10 million to EBITDA.

On the film production and distribution front, Pathe’s revenues increased significantly, despite the fact that the company has had a seesaw year. Pathe controls distribution company AMLF in France, Guild in the U.K. and To-bis in Germany. Last year’s revenues from movie production and distribution rose 59% to $141 million, contribut-ing $500,000 to EBITDA, compared to a $32 million loss in 1995.

Pathe productions or co-productions met with a mixed reception at the box office. “Showgirls” tanked, as did Volker Schlondorff’s “The Ogre.” But local Gallic comedy “Les Trois Freres” hit a domestic home run. One of the most tantalizing questions facing Pathe is what will happen to Adrian Lyne’s “Lolita,” which is still struggling to find a U.S. distrib. Pathe execs go into deep silence on the U.S. potential of the pic.

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